The volatility of the Indian Acetone market is due to stagnant production capacities, the dependency on imports has increased as domestic production struggled to keep pace with the immerging demand. The demand for acetone in the domestic market has increased at a CAGR of 4.2% from 2005-06 to 2016-17.

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A huge disparity in domestic demand and supply status is visible due to the lack of any planned projects for acetone production therefore making pricing vulnerable to international demand supply situation and volatile in the international market.

Most manufacturers prefer to have an integrated facility, wherein phenol production can be used captively for the production of acetone. Displaying this trend, Hindustan Organic Chemicals Limited and Schenectady International Group - India Limited are the only producers of phenol as well as acetone in the country, and between them they carry the heavy burden of catering the demand for the entire country. However, Deepak Phenolics Limited is coming up with Indiaâ€™s largest acetone plant of 120KTPA in Gujarat in the first quarter of 2018, which will reduce import dependency and consolidate our foreign exchange. Fiscal year 2016 to 2021 will see demand being more optimistic due to good end use consumptions in different industries and is expected to increase at a CAGR of 6.0%.

The growth of acetone is highest in Asia, as the continent aims to become the global leaders in cumene, phenol and acetone integrated production facilities. The acetone market is driven by many factors, such as dynamic economic development in Asia-Pacific and a positive demand for MMA from the electronics and automobile industry. However, the global acetone market growth is impeded, owing to the slow demand growth in Europe, and the strict regulations imposed by governments worldwide. Further, development of green solvents and bio based solvents are emerging as a substantial replacement for acetone and increasing use of water based solvents in paints and coatings may hamper the growth of the global acetone market. Nevertheless, demand for acetone is growing at a higher rate as compared to supply, which results in huge potential for new manufacturers to set up facilities globally.